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Home Builders Target of U.S. Wage Theft Investigation

Sep 9, 2011 | Parker Waichman LLP

PulteGroup Inc., Lennar Corp., D.R. Horton Inc., KB Home and other home builders around the country are targets of a wage theft investigation being conducted by the U.S. Department of Labor.  The Department wants to know if the home builders have been complying with the Fair Labor Standards Act, especially in the areas of minimum wage and overtime pay.

According to The Wall Street Journal, builders have received letters from the Department of Labor demanding that they immediately turn over the names, addresses, Social Security numbers, pay rates and hours worked for all employees over the past two years.  The letters also seek names of contractors they've worked with. 

Wage practices in the home construction industry have been the bane of unions for years.  The Laborers International Union of North America in 2008 issued a study that called employees at home builders the "newest victims" of the housing market crisis because of "underpayment," according to the Journal.  Often, home builders rely on vulnerable immigrant labor and layers of subcontractors to keep wage costs low.  A Labor Department official told The New York Times that builders also often misclassify workers and independent contractors to avoid paying them properly.

Wage theft in the home building industry is nothing new.  According to the Times, last year, the Labor Department's investigation of individual wage theft complaints in the industry netted $7 million in fines and involved 4,000 employees.

The problem is bad enough that the Labor Department has decided not to wait for more individual complaints.  The home builder wage theft probe is part of the department's plans to target industries that have a track record of exploiting vulnerable workers, the Associated Press said.  In recent years, similar wage theft investigations have scrutinized the hotel, restaurant, janitorial, health care and day care industries.

"We are actively looking at those industries that employ the most vulnerable workers and that engage in business practices, such as misclassifying employees as independent contractors that result in violations of minimum-wage and overtime laws," Department of Labor spokesman Carl Fillichio told the Associated Press.

Since 2009, the Labor Department has hired about 300 additional investigators to probe complaints of unpaid work, lack of overtime pay and minimum-wage violations, the Associated Press said.

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